By: 18 December 2015
GT Law went under due to Jackson reforms and loss of Sonae case

It has emerged that GT Law, a firm that went into administration in October, was sunk due to losing its group litigation action in the Sonae case and a loss of revenue following the implementation of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act.

The Law Society Gazette has reported that the firm, which was owned by First Stop Legal Services, was hit hard by the Jackson reforms which came into force in 2013. The firm’s administrators said that the reforms had “a direct and material impact on future profitability” as the business only operated in the personal injury sector and relied heavily on the referral fee model.

“Historically, the company sourced its work through various marketing arrangements with referrers, however, following the Jackson reforms the company’s workflow fell dramatically,” said that administrator’s report.

The firm also lost significant working capital in its pursuit of the Sonae chipboard-plant fire group claim this year. It tried to secure compensation for thousands of clients but lost the case and became embroiled in controversy over the way clients were encouraged to pursue a claim.

The administrator’s statement said that the firm had £1.7m of work in progress at the time of going out of business and a debt to third-party funder HTG Ventures of almost £4m.

According to Companies House reports the firm made £7.9m in the 2013/14 financial year.